(Business Perspective) Does MS really need Xbox Hardware?

[javi741]

Back to the conversation about Xbox leaving the console market, it might seem surprising at first with Xbox being relatively iconic and a household name that they would want to leave the console market, especially when their past 2 consoles sold relatively well with 50M+, when you look at their history in detail it wouldn't be so suprising to see why Microsoft would want to leave the console market, Xbox the past 4 generations always been trying to just stay afloat in a war that they'll always lose to PS unless PS just hands them the victory.
First off, the main reason why Microsoft got into the console market in the first place is cause they were scared of the PS2 & future Playstations taking over the living room as a multimedia device that could play DVDs/CDs, browse the web and potentially replace the need for a Windows desktop PC, but now it's clear that consoles will never replace PCs in their functions so Microsoft really doesn't need to worry about consoles replacing their PC anymore to keep making consoles.
Even if they want to stick to consoles for profit, they haven't done a pretty terrible job at it all these generations and in reality always been in a losing battle losing billions just to keep up with PS. While the Xbox sales wise was considered a pretty decent success by being able to outsell the GC and put even a small fight against the PS2 with 24M sold, Microsoft would end up losing 4$Billion that generation taking heavy losses on the hardware, marketing, and money-hatting developers just to sell that small of a number of units, any other company would've folded under those losses but Microsoft's high cash is what kept them afloat.
While the Xbox 360 was considered a big success sales wise selling 85M and went toe-to-toe with PS, tbh I feel like the Xbox sold that well more-so cause of Sony screwing up hard rather than people who truly preferred Xbox, and wasn't a sustainable amount of success for the long term. It seems like gen after gen Microsoft just fails to attract the European & Japan markets as much as PS which makes it difficult for them to compete. Despite the PS3 screwing up so hard selling at 800+$ in 2024 inflation standards at launch, having worse online, worse performing multiplats, launched a year later, launched with less must have exclusives like Halo 3, and not having a popular gimmick like the Kinect behind a huge marketing budget, the PS3 was still able to outsell the 360 where the PS3 was able to win it in Europe & Japan despite all it had against it.
But even though the Xbox 360 was a big success sales wise, Microsoft STILL ended up being unprofitable that gen mainly cause of the RROD situation which costed Micrsoft billions to fix to the point where the Xbox 360 wasn't able to recover when it comes to profit.

Now when it comes to the Xbox One, people think that the Kinect, anti-consumer policies, and 100$+ more expensive than the PS4 lost them that gen, and while it did contribute to it, they were bound to lose the gen anyways. Even when Microsoft took away those policies, offered cheaper prices, and a more appealing and powerful console options and redesigns later that gen it did very little to change the tide, which were very similiar things Sony did with the PS3 and PS3 was able to comeback alot better mainly cause Sony always was the favorite in Europe & Japan while Xbox was always in an endless uphill battle just to stay afloat.

I imagine that trying to stay afloat like this with Sony in the console space likely had been expensive for them, since the Xbox One gen they've typically always given more discounts on their hardware taking more and more losses on the hardware just to sell decent, and along with developing games with a limited install base on the Xbox One, may be more detrimental than we may think behind the scenes.
We've already recently seen the Sony/Insomniac leaks where despite the fact that PS is doing crazy successful with the PS4 selling 100M+ and the PS5 on its way to do so as well, Sony is still struggling to maximize their profit at times with certain big games like Rachet & Clank losing money and other titles not meeting profit hopes, forcing lay-offs and Sony to port their exclusives to PC to stay profitable, imagine that with Microsoft with a console install base that's less than half of PS and a company that naturally spends more money than they need too. It's hard to say if this is happening cause Microsoft never reports on profit for their Xbox division, but the fact that they seem to be leaning away from pushing console sales these past few years makes me believe that the console business for them hasn't been great in terms of their profitability hopes.

It's coming to the point where Microsoft was pricing the Xbox Series S at 150$ this past holiday season which is wild to see for a next-gen console in their 3rd year to have a price that low and still get demolished by PS in sales. Even Phil Spencer given quotes as of recent that just seems discouraging on the future of Xbox, even going as far as admitting that even if they release great games wouldn't change the tide for Xbox, it just feels like they have no purpose to compete in console sales when it may be holding them back by taking on losses on hardware and marketing just to sell decently compared to Sony and the Xbox install base isn't big enough for their 1st party sales to be much more profitable compared to just releasing all their software as a 3rd party developer.